Why You Should Buy Yourself a Car for Christmas

If you’re in the market for a new vehicle, get serious about shopping now. December tends to deliver the deepest discounts of the year, with buyers receiving an average 7.7% off MSRP, TrueCar.com finds—vs. 6.8% in January, for instance. For an average buyer, that’s more than $300 in savings.

Why December? “Dealers and manufacturers are looking to meet their annual sales goals, so many offer rich incentives,” says TrueCar senior analyst Cari Crane. Meanwhile, prices are slashed on 2016 vehicles as next year’s models move onto the lot, says Brian Moody, executive editor at Autotrader.com. Follow these steps to drive down the price of your new vehicle.

Hone your haggling

To do even better than the average December deal, shop when temperatures plunge. Cold, snowy days draw fewer buyers, giving you a further advantage, says Moody. End-of-day shopping can yield better prices, too, if a weary salesperson wants to go home. Also, because dealers and manufacturers have monthly as well as annual goals, you can save by waiting till the end of the month, suggests Crane—although you risk a more limited selection, particularly on 2016 models.

To set an upper limit, use Kelley Blue Book’s Price Advisor to identify a vehicle’s “fair purchase” price: what you’d realistically expect to pay. Then get bids from three or more dealers. If you do it online to save time and avoid in-person sales pressure, specify the options you want so that you get true comparisons. (If you’re looking for specific features on 2016 models, you may need to cast a wider net, says Cars.com executive editor Joe Wiesenfelder.) Say upfront that you won’t pay fees for marketing, administrative, or “dealer prep” (often just car washing)—all of which are negotiable. And haggle on price, not monthly cost, says Jack Nerad, Kelley’s executive editorial director: You don’t want the dealer to lower payments just by extending the loan term.

Finally, ask for extra discounts. Many automakers give rebates to students, seniors, and military, for example. These incentives are typically not promoted but can range from $300 to $1,500, says Nerad.

Cut borrowing costs

To trim the cost of your loan, if you’re not paying cash, get a baseline quote from your bank or credit union and compare it to automaker financing. The latter is likely to be the better deal. “Because car manufacturers want to be a one-stop shop, they offer aggressive interest rates,” says WalletHub analyst Jill Gonzalez.

In September, for instance, the average rate on 36-month new-car loans from manufacturers was 1.45%, vs. 2.2% at credit unions and 4% at regional banks, WalletHub says. Gonzalez predicts automakers will trim rates even further by year-end, trying to lure buyers.

Aim for resale

If you don’t plan to drive your new vehicle into the ground, look for a car with higher-than-average resale value. Start with the right model: Both Edmunds.com and Kelley Blue Book track those that hold their value.

Cars with the Best Resale Value

Best Sedan: The Honda Civic has appeared on Edmunds.com's Best Retained Value list four times since 2011, making it the best non-luxury sedan in terms of resale value. Over five years, the Civic depreciates by an average of 35%, compared to 60% depreciation for the typical vehicle.

courtesy of Honda

Best Sports Car: The Porsche Panamera makes an appearance on the Best Retained Value Awards list four times in six years. As is the case for all luxury vehicles, it depreciates faster than non-luxury models. At $86,981, it depreciates nearly 53% over five years.

courtesy of Porsche

Best Wagon: The Scion xB makes Edmunds' Best Retained Value list for the non-luxury wagon segment three times since 2011. On average, buyers pay less than $20,000 for the car up front, but over five years their costs add up to $27,278 when fuel, maintenance and repairs, and tax fees are considered. Over five years, the Scion xB depreciates 30%.

courtesy of Scion

Best Wagon: Cars within the BMW 3 Series, like the M3, are rated 5/5 stars by consumers, according to Edmunds, despite a total cost of more than $70,000. The BMW M3 depreciates less than other autos in the luxury segment, losing 47% of its value over five years.

Alberto Martinez—BMW

Best Coupe: The Ford Mustang, which was fully redesigned in 2015, is more fuel efficient than any of the previous models. But those fuel savings don't ease the pain of the depreciation costs. The Mustang loses 35% of its value five years after you purchase it.

Charlie Magee—Ford

Best Coupe: In addition to being the most awards maker in the luxury wagon segment, the BMW 3 Series also qualifies as the most frequently recognized luxury coupe when it comes to retained value. But be warned: the fuel costs, $10,830, come second only to the depreciation costs over five years (it loses 47% of its value in that time.)

courtesy of BMW

Best Convertible: The Chevrolet Corvette—named best non-luxury convertible for retained value four of six times since 2011—may have a near-luxury price tag at $60,280. That said, it depreciates less than some of its luxury counterparts, losing 42% of its value over five years.

Chevrolet

Best Convertible: Take a deep breath before driving off the lot in a Porsche 911. The vehicle may have been named the best luxury convertible for retained value three years of six, but it still loses half of its value after you buy it.

Autodesk VRED Professional 2014 SR1-SP7

Best Compact Truck: Raise a glass for the Toyota Tacoma, which was named the best compact truck for retained value all six years—it only loses 27% of its value over five years. Worth noting: the truck "often costs more than competing trucks and prices are high on the used market as well," according to Edmunds.

David Dewhurst Photography—2012 David Dewhurst Photography

Best SUV: The Jeep Wrangler was impressively named the top non-luxury SUV for resale value five of six years, losing only 33% of its value over five years.

FPI studios

Best SUV: The Lexus GX 460, with a true ownership cost of $60,439, loses 43% of its value over five years—10% more than its non-luxury counterpart.

David Dewhurst Photography—2012 David Dewhurst Photography

Best Minivan: The Honda Odyssey, aka the de facto soccer mom car, is a perfect 10 when it comes to winning awards every year of Edmunds' Retained Value rankings. Affordably prices at $35,144, it depreciates 39% over five years.

courtesy of Honda—Wieck

Best Hybrid: Say what you will about the Toyota Prius and its drivers, but the hybrid vehicle only loses 43% of its resale value over five years. That, of course, is coupled with the fact that you save thousands compared to traditional gas-engine vehicles when it comes to fuel costs.

courtesy of Toyota—Copyright 2011

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For extra features, consider both price range and regional taste, says Ron Montoya, a consumer-advice editor at Edmunds. Buyers of used luxury cars will more likely splurge on extras than budget shoppers, for instance, and in snowy areas, all-wheel-drive sedans hold value better than front-wheel-drive models.

While you may have fewer options at year-end, seek features like sunroofs and leather seats, which hold up better than chrome wheels or custom paint, Montoya says. And while you might enjoy pricey technology like a premium sound system or remote car starter, don’t consider it a long-term investment. “A used-car buyer isn’t typically interested in the latest technology,” Montoya says. “Otherwise they’d be buying a new vehicle.”

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